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Japan service sector activity slumps most in a decade as virus impact spreads

FILE PHOTO: Employee works at Japanese brewer Kirin Holdings' factory in Toride

TOKYO (Reuters) - Japan's services sector contracted at the fastest pace since the global financial crisis in March as a shock to demand from the coronavirus pandemic greatly hit business activity and expectations.

The world's third-largest economy is on the brink of recession after the coronavirus squashed hopes of a domestic-led recovery, ramping up pressure on policymakers to take major steps to support the economy.

The final seasonally adjusted au Jibun Bank Japan Services Purchasing Managers' Index (PMI) slumped to 33.8 in March from 46.8 in the previous month.

The headline figure marked the lowest reading since February 2009 during the global financial crisis but was slightly above a preliminary 32.7 released last week.

The survey showed business expectations shrank at their fastest pace in a decade, while new business was at its lowest level in nearly eight years, suggesting firms are struggling with the virus outbreak.